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In the wake of the deal whereby Rick Scott agreed to the Affordable Care Act’s Medicaid expansion in exchange for a waiver allowing him to contract with private managed care companies to handle the state’s entire Medicaid population, we learn today that Arkansas will join the ranks of the “expanded” via a different but more ground-breaking deal whereby the new Medicaid beneficiaries would actually be covered through the new private health insurance exchanges created by Obamacare.

The details are still hazy; it’s not clear, for example, whether the new “Medicaid” folk in Arkansas will be entitled to exactly the same benefits as those in traditional Medicaid; and/or will be subject to higher copays and deductibles. What is clear is that this was the price the Republicans who now control the Arkansas legislature exacted from Democratic Gov. Mike Beebe to go along with the expansion, even though it might increase per-beneficiary costs. Check out this explanation from the Arkansas Times’ David Ramsey:

Such a deal would potentially be a windfall for insurance companies, as well as hospitals, who would likely see higher reimbursements from private insurance on the exchange….

As for costs, buying private insurance for citizens is likely more expensive than providing Medicaid. That almost certainly means that this deal will have a higher price tag for the feds. And it could mean higher costs for Arkansas once the state has to start chipping in….

“My main objective is to make this legislature as comfortable as I can make them,” [Gov. Beebe] said. “With a three fourths vote requirement in both houses, that’s a steep, steep burden….If the majority would prefer to go this way to get this done, I’m happy with that. If they want to go the other way, I live with that as well. The cost to the taxpayer for the first three years in the state of Arkansas is going to be the same.”

Beebe said that for some legislators, subsidizing folks to buy private insurance was preferable to directly covering people through a government program for “philosophical” reasons.

So let’s be clear: using the exchanges will be more expensive, and perhaps less generous to beneficiaries, than traditional Medicaid, but because Republicans prefer private insurers for “philosophical reasons,” that’s how it’s going down (this is also the same approach Ohio Gov. John Kasich is pursuing in conditionally approving the Medicaid expansion, though HHS has yet to rule on his waiver request).

This draws attention to two pretty important national issues: the first is the persistent gap between the faith conservatives place in the “efficiency” of private-sector health insurance and all the available evidence. And the second is the emerging long-term conservative strategy of undermining Obamacare by limiting its “public” elements as much as possible and then chipping away at the regulations that make it available and the subsidies that make it affordable. This is precisely what Douglas Holtz-Eakin and Avik Roy called for in their much-discussed recent op-ed on how conservatives should adjust to the enactment of Obamacare.

So while no one can blame Beebe for playing the hand that was dealt to him, I’d say the Arkansas “Medicaid expansion” may not be worth more than two cheers.

Ed Kilgore
is a contributing writer to the Washington Monthly. He is managing editor for The Democratic Strategist and a senior fellow at the Progressive Policy Institute. Find him on Twitter: @ed_kilgore.

And as Dean Baker endlessly points out, politicians are not philosophers. The answer to the interests who provide them the money to get re-elected

mb on February 28, 2013 1:05 PM:

Stupidity wins the day.

Josef K on February 28, 2013 1:17 PM:

So let’s be clear: using the exchanges will be more expensive, and perhaps less generous to beneficiaries, than traditional Medicaid, but because Republicans prefer private insurers for “philosophical reasons,” that’s how it’s going down

This wasn't exactly unexpected, was it?

OTOH, a great many more people will have health coverage now (however flawed it might be at present), and the Republicans in the Statehouse will now be complicit in this. I'm not pleased with the fact they're going with 'philosophical' excuses, nor how there's now greater ambiguity about the ACA's ultimate success, but I'll take what good news I can get right now.

bdop4 on February 28, 2013 1:40 PM:

The primary reasons for ACA was to expand coverage while bringing down cost. If a state can't prove per capita cost reductions through market efficiencies, then that should be a non-starter with the HHS.

States shouldn't be entitled to federal largesse for ideological reasons.

Kathryn on February 28, 2013 1:42 PM:

The GOP, always looking out for the little guy. In low income Arkansas, prop up the big guys and let those poor folk pay more, that's the ticket.

smartalek on February 28, 2013 1:44 PM:

Will the Dem's have the wit and spine to call out yet another Publican-provided proof certain that they don't give a shit about "deficits," "debt," "waste/fraud/abuse," or "the taxpayers' dollars?"
Stay tuned for the inevitable anticlimax!

Celui on February 28, 2013 2:34 PM:

Yes, there is welcome good news for the less fortunate in that curious RTW state of Arkansas, the "Land of Opportunity" (for some). But, this seemingly always comes at a cost (proportionately high) for the many who are the less fortunate. Political ideology trumps the needs of the many who are politically unable to influence the few 'true believers'. This is an expediency that the governor will have to accept, but for the citizens of Arkansas, it could be a lot better. Would that this NOT become some kind of 'optional path' followed by neighboring states such as MO. @bdop4: you are so very correct. Thanks for your inclusion.

Craptcha: 'tusesses accent' NOT any diacritical mark or literary accent that is part of the French lexicon

emjayay on February 28, 2013 7:31 PM:

Having a three tier (Medicaid, Obamacare, Medicare) system, plus VA (National Health for servicemembers) does not make any sense.

The way the private traditional for or not for profit health care system most people are in ends up subsidising not just huge profits and high prices but also insane paychecks for upper level management at not for profit institutions was described in the Time article. It focused on hospitals, but the same thing applies to all doctor billing. None of it was really news to anyone paying attention.

I'm just hoping that Obamacare, which extends the existing extremely costly (like X2) nightmare to everyone will eventually lead to a much more rational system for everyone.

A rational system would just put all healthcare on some kind of a price contolled taxpayer paid system for everyone, or the same thing with some premiums and higher copays etc. for those under 65 in middle and upper incomes.

Suddenly, it's in both parties' interests to fight the broader decline of marriage. Here's the case for a "marriage opportunity" agenda. By David Blankenhorn, William Galston, Jonathan Rauch, and Barbara Dafoe Whitehead